FACTS:

The case involves a petition for review on certiorari of the decision of the Court of Appeals, reversing the decision of the Court of Tax Appeals, which affirmed with modification the decision of the Commissioner of Internal Revenue ruling that COMASERCO is liable for value-added tax (VAT) for services to clients during taxable year 1988. COMASERCO is a corporation organized to perform collection, consultative, and other technical services, including functioning as an internal auditor, for Philamlife and its affiliates. The BIR issued an assessment to COMASERCO for deficiency VAT for taxable year 1988. COMASERCO filed a letter-protest objecting to the assessment and subsequently filed a petition for review with the Court of Tax Appeals. COMASERCO argued that the services rendered were on a "no-profit, reimbursement-of-cost-only" basis and that it was not engaged in the business of providing services. The Court of Tax Appeals ruled in favor of the Commissioner of Internal Revenue, but the Court of Appeals reversed the decision, citing a previous case where COMASERCO was held not liable for fixed and contractor's tax for similar services rendered to Philamlife and its affiliates. The Commissioner of Internal Revenue filed a petition for review on certiorari with the Supreme Court, which gave due course to the petition.

ISSUES:

1. Whether COMASERCO was engaged in the sale of services and thus liable to pay Value Added Tax (VAT).

RULING:

1. The Court held that COMASERCO was engaged in the sale of services and was therefore liable to pay VAT.

PRINCIPLES:

• VAT is a tax on the value added by the performance of a service, regardless of whether profit is derived.

• Any person who, in the course of trade or business, sells or renders services is liable to pay VAT.